Surprise! Extra Fees Are Often Hidden in Rental Car Contracts

A nationally recognized reporter, writer, and consumer advocate, Ed Perkins focuses on how travelers can find the best deals and avoid scams.

He is the author of "Online Travel" (2000) and "Business Travel: When It's Your Money" (2004), the first step-by-step guide specifically written for small business and self-employed professional travelers. He was also the co-author of the annual "Best Travel Deals" series from Consumers Union.

Perkins' advice for business travelers is featured on MyBusinessTravel.com, a website devoted to helping small business and self-employed professional travelers find the best value for their travel dollars.

Perkins was founding editor of Consumer Reports Travel Letter, one of the country's most influential travel publications, from which he retired in 1998. He has also written for Business Traveller magazine (London).

Perkins' travel expertise has led to frequent television appearances, including ABC's "Good Morning America" and "This Week with David Brinkley," "The CBS Evening News with Dan Rather," CNN, and numerous local TV and radio stations.

Before editing Consumer Reports Travel Letter, Perkins spent 25 years in travel research and consulting with assignments ranging from national tourism development strategies to the design of computer-based tourism models.

Born in Evanston, Illinois, Perkins lives in Ashland, Oregon with his wife.

Say you rent a car in Vancouver for a two-week tour of British Columbia and decide to slip in a quick visit to Banff and Lake Louise, only to find that your little detour into Alberta costs hundreds of dollars. Surprised? You shouldn’t be: Many rental car contracts, supposedly with “unlimited” mileage, limit areas where you can drive. If you drive outside these areas, you could face some very unpleasant consequences.

A good friend just tried to arrange that exact rental. Fortunately, he had enough sense to read the fine print from the first rental company he contacted and avoided a problem. Had he not checked, however, he could have been on the hook for a lot of money. The company’s policy stated that the unlimited mileage was confined to driving in British Columbia. If a driver takes the car out of British Columbia, the entire rental—not just the portion outside British Columbia—reverts to a charge of 50 cents Canadian per kilometer (about 75 U.S. cents per mile). My friend figures on driving about 1,200 miles, total, during his trip, and a short cross-border jaunt could hike his total bill by $900—far more than the base cost of the car.

This problem is not confined to Canada: You find it in many areas of the United States, at least from some companies. I’ve seen, for example, California rental contracts that prohibit out-of-state driving except for Clark, Douglas, and Washoe Counties in Nevada (for Las Vegas, Lake Tahoe, and Reno). That means, for example, no driving 15 miles into Oregon to attend a play at Ashland’s Oregon Shakespeare Festival. Ditto Northeastern rentals limited to a few New England states.

If you violate one of these limits during a rental, you’re liable to some combination of three very unpleasant consequences:

Reversion of the entire rental from “unlimited” miles to a stiff charge—typically, somewhere between 75 cents and $1 per mile.

Having to pay extra—a lot extra—for service if you have a breakdown.

Cancellation of any insurance coverage normally included in the rental—even when you buy the extra-cost collision-damage waiver or personal liability coverage.

In times past, many drivers decided to risk minor deviations from geographic limits, figuring that the rental company would never know. Unfortunately, however, that’s no longer the case: The rental company will know. More and more rental cars are equipped with GPS units that allow rental companies to monitor the locations of their cars. Those units operate whether or not you, as a driver, ask for the rental company’s GPS guidance option. If you drive one of these cars outside the designated area, the company knows.

Rental companies have used these GPS units for other purposes. In one highly documented case, a rental company charged a driver $150 each time the car exceeded 79 miles an hour for more than a minute or two, and the driver racked up several $150 “instances” during a single one-way extra-speed Interstate cruise. California, New York, and possibly some other states have enacted laws prohibiting rental companies from using GPS information this way, but you can’t count on being exempt anywhere else.

Most rental contracts include a few other prohibitions. Most are sensible and obvious, such as no DUI, no excessive speed, no racing, and such. Two fairly common prohibitions, however, might cause some problems:

No drivers other than those signed on as “additional drivers.” Unless the contract specifically allows it, this can apply to even your spouse, parent, or adult children. It might also be applied to a valet parking your car, although this seems to be a rare problem.

No driving on unpaved roads. You never know when you might encounter an occasional stretch of unpaved highway, but at least in theory, you shouldn’t drive a rented car over it.

These would not necessarily be picked up by GPS monitors, but you still run risks if you violate them.

The bottom line: Before you buy into a rental, check for any such limitations. Either abide by them or find another rental company.

Have you ever had a bad experience with rental car contracts? How do you avoid surprising charges on your bill? Share your thoughts, experiences, and advice by submitting a comment below!